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Mobile pay had a great week, but still has "long road" ahead

Apple cites deal with CVS and 7-Eleven to bring Apple Pay to retail, and smartphone access to cash via Chase ATMs, as proof that mobile pay is taking off. But analysts say it could take as many as 10 years to go mass market.

Mobile pay had a great week, but still has "long road" ahead

Jefferson Graham visits a Chase bank to see how to use a mobile phone to withdraw cash, without having to use a physical debit card, on Talking Tech.
USA TODAY

MANHATTAN BEACH, Calif. — The idea of paying for stuff with our smartphones has been touted for years as a holy grail. You can forget your wallet at home, but these days, no one in their right mind would be caught dead without their smartphone by their side.

So if we could pay for stuff just by waving our phones and walk away much faster than before, why not? It's not that credit cards are hard to use, just that mobile pay is easier.

So when Apple introduced Apple Pay in 2014, and Google countered with Android Pay, expectations were that retailers all over the globe would upgrade their existing equipment to accept smartphone payments.

That hasn't really happened in a big way although this week, Apple got some huge guns joining the party. The drugstore chain CVS said Apple Pay will be available at 7,800 of its 9,800 locations later this year, as well as at the 7-Eleven convenience stores. There are nearly 8,000 locations for 7-Eleven in the United States.

Using the smartphone to withdraw money from a Chase bank ATM(Photo: Jefferson Graham)

Perhaps an even larger deal--the No.1 bank chain in the U.S., Chase, just brought Apple Pay to 15,500 ATMs this week, following in the footsteps of Bank of America and Wells Fargo, which also offer the service.

"Now this is interesting," says Jordan McKee, an analyst with 451 Research. "This is a nice advancement that makes mobile pay more attractive, but it will take a fair amount of education to get consumers on board."

The process isn't as easy as it sounds. At retail locations, you just hold your phone over the payment device and use your thumbprint or facial recognition to confirm payment. But that's not how it works at the ATM.

Instead, first you need to add your debit card to the Apple Wallet app, and once that's done, start the transaction by waving the phone, then type in your PIN code to start and finish the transaction.

(We did a demo of it Friday at a Chase branch in this Los Angeles coastal suburb. Once the setup is complete, the transaction is pretty smooth and to hear the branch managers tell it, safer than just using a debit card. Hackers would need two PINs, from the debit card and phone, to break into it, not just the one.)

The ATM advancement in a huge bank that's touting the new service in lobbies across the USA is another bragging point for Apple, as the company, Google and Samsung try to convince skeptical consumers to join the party.

Apple touted new numbers this week on the growth of its mobile payment schemes, saying that "tens of millions" of use it daily, and that over 1 billion transactions were completed in the June quarter.

However, according to McKee, Apple is looking at nearly 10 years before mobile pay becomes mass market with consumers.

Just 1% of in-store sales at retail in 2017 were completed with mobile pay, says McKee, and that's up from three-fifths of a percent in 2016.

"So it's growing, but it has a long road ahead."

And while CVS and 7-Eleven are big wins for Apple, many of the top U.S. retailers are still missing in action. Apple touts McDonald's, Subway, Starbucks and Best Buy, among others, but it doesn't have many of the top 10 retailers, including Walmart, Target, Home Depot, Kroger, Costco and Lowe's.

McKee says that 25% of iPhone users have tried Apple Pay, compared to 8% for Samsung Pay and 10% for Android Pay.

Here at Talking Tech, we love mobile pay, using it with the iPhone 8 Plus and our fingerprint for a much faster transaction than ever seen by exchanging credit cards. So for our sake and our early adopter audience, we hope to see mobile payment more widespread sooner than later.

Wild Cherry Slurpee, here we come!

A woman looks at an iPhone 8 Plus at an Apple Store in San Francisco on Sept. 22, 2017. (Photo: Jeff Chiu, AP)

In other tech news this week

Samsung previewed a pricey new tablet, the Galaxy Tab S4 at a splash New York event. The idea is to take on Apple's iPad Pro, but getting consumers to fork over upwards of $800 for a competing tablet will be quite a marketing challenge.

That's the latest edition of the Talking Tech newsletter. Subscribe at http://technewsletter.usatoday.com, tune in to the daily Talking Tech podcast on Stitcher, Apple and Google Podcasts and follow me (@jeffersongraham) on Twitter, Instagramand YouTube.